ARM Snags New Customers in Record Quarter

SAN JOSE, Calif. -- ARM Holdings PLC reported a record quarter based on closing 48 new licensing deals, 11 with new customers. The deals drove revenue up 26 percent year-on-year to $286.7 million and pre-tax profits up to about $150 million.

Licensing growth "was strong and diverse," said Tom Lantzsch, executive vice president of strategy at ARM, in an interview with EE Times. Given the third quarter spike, ARM expects sales in the coming quarter to be about flat, he said.

Eighteen of the 48 new licenses were for microcontroller-class Cortex-M products, a fact that kept ARM’s average royalty per chip flat year-on-year at 4.9 cents. However, the high-end Cortex-A was the second biggest area, with 15 new licenses, including one to Mediatek for the 64-bit ARMv8 processor. ARM also signed five new licenses for its Mali graphics core, one from a new customer.

Among ARM's new customers, memory vendor Spansion announced plans for a range of ARM-based chips for automotive, industrial, and embedded consumer applications earlier this year. The company is also seeing growth in SoCs for wired systems, a relatively new area for ARM.

"Even traditional analog companies are adding intelligence to their devices, while others are entering new market spaces and some smaller vertically integrated companies" are adopting ARM cores for markets in the Internet of Things, said Lantzsch.

>> IMO one of the reasons ARM has been so successful is that they haven't been greedy.

I think this firm has a solid and good IP. There are many free things which no one touches. I think ARM has shown resilence and ability to innovate. With good IP, they are doing well despite the small fees as at least people are interested in their products.

IMO one of the reasons ARM has been so successful is that they haven't been greedy. Sure, they could probably charge more for licenses and end up like MIPS, PowerPC, and Intel's attempt to license Atom. By keeping licensing fees low, adding an ARM core to a chip is an easy design decision. Those pennies add up to real money. JMO/YMMV

Your knowledge of ARM, its business model and the markets it is already active in is very poor.

"This quarter, we saw strong growth in the number of ARM-based chips sold into markets beyond mobile devices. The non-mobile markets now represent 52% of all ARM-based shipments. ARM-based microcontrollers and smartcards shipments increased 20% year-on-year"

>> Roughly 1+ billion $ / year in revenues and a 50% profit margin is from a purely profit point of view equal to 5 billion $/ year in revenue and a 10% profit margin (which is what we find in average industries).

That is not financially true though it could make a lot of mathematical sense. If you have revenue of $5B, it means you have a better market share which could be more important than the profit you are making.ARM is a great firm of course but I just think they can take up Intel and help provide alternatives in the overall computing space, not just mobile.

Roughly 1+ billion $ / year in revenues and a 50% profit margin is from a purely profit point of view equal to 5 billion $/ year in revenue and a 10% profit margin (which is what we find in average industries).

They aren't doing that bad from a capitalist point of view, when considering profits and their stability over time.